The price is the biggest obstacle to restrict the popularity of LED lighting

2012/3/2

Research Center survey of manufacturers believe that current prices are still the biggest obstacle to restrict the popularity of LED lighting. In fact, the initial acquisition cost of in-depth comparison of LED and energy-saving lamps, energy-saving costs, replacement labor costs, we found that the comprehensive cost of LED lighting is lower than the energy-saving lamps. LED general lighting delay to achieve universal access, the final analysis, the reason is still out on price. The same light intensity, LED lights, the initial purchase cost is almost twice that of the energy-saving lamps. At the same time, the actual use of time subject to the LED is often less than its rated lighting, the energy saving effect has not been recognized by the public.
From the findings, the LED lighting manufacturers, especially the package manufacturers of the midstream and downstream applications manufacturers, and are willing to exchange sales by cutting prices elevated. After the price increase sales, help manufacturers achieve economies of scale, thus increasing the bargaining power of upstream chip makers, the final price of the hedge down to reduce costs, maintain the manufacturer's existing profitability.
A factory LED profits of a high level, able to withstand the price cuts, but also willing to cut prices, and then bigger and LED lighting "cake", but they are unable to unilaterally lower prices. The reason is that domestic manufacturers are more concentrated in LED packaging and application sectors, the cost of a higher proportion of LED power chips and more purchased from foreign manufacturers, chip businesses highly concentrated, such as Cree, Nichia chip manufacturers demand, strong bargaining power, chip manufacturers do not take the initiative to lower prices and lower prices of domestic manufacturers is nothing short of the initiative to undertake a loss. In fact, even the packaging and lighting companies take the initiative to cut prices, but also able to reduce the cost of the LED general lighting. LED terminal price level, by Philips, Osram, Op, and other industry giants. For these giants, whether it is to use energy-saving lamps, or the use of the LED general lighting market size is a stock rather than incremental. Unless it can see the LED lighting start timing is relatively mature, or the giants will not take the initiative to provoke a price war. From this logically, pay close attention to price-cutting trend of LED lighting giant, is the judgment of an important industry inflection point.
It is noteworthy that, GE, Philips, Toshiba, Panasonic, has gradually begun to attach importance to the expansion of the LED lighting applications, began to increase the C type, and began the integration of advertising investment and internal division.

Boom remains to be seen
The long-term prospects for the development of LED industry should be optimistic about, but can not be ignored is the industry's recent performance remains to be seen.
From the change of Taiwan's LED industry revenue, after the Spring Festival in 2011, the chip and package revenue continues to decline, and since the fourth quarter of 2011 accelerated decline in decline in December 2011 at their annual maximum chip revenue chain decline of 31%, package revenue fell nearly 11% qoq. Inventory, Korea, Taiwan, mainland enterprises inventory at record highs, to the inventory process is not over yet, the product price exists may continue to decline. LED backlight short-term demand to pick up enough to change the tide of the industry as a whole. In addition, according to LEDinside's latest price survey reports for the fourth quarter of 2011 due to inventory clearing impact, LED average offer decreases about 10% and looking forward to the first quarter of 2012, fell sharply last quarter offer, coupled with new product introductions, estimated decline in the average offer is expected to shrink this quarter.
Research process, the manufacturers said that part of the buyers that the prices of LED products will continue to decline, rather than before the price drop buy to buy is better, etc., which is the popularity of another factor restricting LED. If the product price declines really narrow, waiting to see the early release requirements, industry or is expected to usher in a short-term pick up.
The cost advantage is the long-term competitiveness
Continuing industry downturn, has threatened the survival of many domestic LED industry chain company. Price a little decrease of the situation, the test is in fact the manufacturers ability to control costs. Data shows that the cost of LED bulbs, LED epitaxial wafers and chips cost accounting for approximately 37%, LED packaging accounted for 24%, 15% of the cost of sales. Cost advantage will have better profitability, be able to compete on price, can meet the market reshuffle.
Reduce costs is available from the following aspects. The first is the large-scale production and to improve the yield, this sense, the higher the revenue size of enterprise, the advantages of the more obvious. Second is to reduce costs through technological innovation, which in turn is divided into three sub-levels, including lower wafer cost, lower packaging costs, and reduce cost of sales. Able to achieve a vertically integrated enterprise, the greater the cost is room for improvement. Packaging costs and lighting costs depends on the manufacturing capacity and management level.